FATF Updates Grey List: What Does This Mean for Your BSA Program?

Terri Luttrell, CAMS-Audit
March 18, 2021
Read Time: min

The Financial Action Task Force Updated Their List of Countries Under Increased Monitoring

The FATF sets the standards for international adherence to BSA/AML programs and highlights deficiencies. 

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International Watchdog

FATF monitors for AML deficiencies

The Financial Action Task Force (FATF), established by the Group of 7 (G-7) in 1989, is the global money laundering and terrorist financing watchdog, much like the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Asset Control (OFAC) in the United States. As an intergovernmental body, FATF has a unique position; it has been charged with analyzing AML programs worldwidesetting standards for international adherence, and preventing these illegal activities and other threats to the integrity of the international financial system.  

FATF monitors countries' progress in implementing the adequate adaptation of Anti-Money Laundering and Counter Terror Financing (AML/CTF) programs base on the FATF Recommendations. Periodically, FATF publishes updated reviews of countries who have money laundering concerns and should be considered higher risk for Bank Secrecy Act (BSA) purposes. The industry refers to this category as a “grey list”, although that is not a term used internally by FATF. 

Grey Listed

Four countries added to "Grey List"

FATF recently updated their list of “grey listed” countries, or jurisdictions, under increased monitoring These jurisdictions are actively working with FATF to address deficiencies in their AML/CFT regimes. Under FATF rules these countries must resolve identified deficiencies within an agreed upon timeframe and is subject to increased monitoring. The new countries added to this grey list are: 

  • Burkina Faso 
  • Cayman Islands 
  • Morocco 
  • Senegal 

FATF recently removed the Bahamas from the list as they have made significant progress in their AML/CTF regime.  

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Blacklisted

Two countries remain on "blacklist"

Remaining on the high-risk jurisdiction list, or blacklist”, are countries with serious deficiencies in their AML/CTF programs with no plans to rectify identified issues are 

  • Iran 
  • Democratic People's Republic of Korea (DPRK) 

The black-listed countries are on the OFAC list as well, with serious sanctions imposedThe entire list and descriptions of deficiencies of countries on FATF grey and black lists can be reviewed here.  

FATF Updates

What do these updates mean for your BSA program?

When FATF periodically updates these lists, generally on a quarterly cycle, why is this important for financial institutions to track? What BSA program actions should follow an update?  Below are key steps, although not all-inclusive, to implement upon a FATF update: 

  • Update the geography section of your risk assessment 
  • Countries added to FATF list should be included as high-risk jurisdictions   
  • Countries removed can be changed as a high-risk jurisdiction, but only if the financial institution agrees with the lowered risk   
  • Perform a customer search on the countries added as AML/CFT concerns; on a risk-based approach elevate the risk of these customers as appropriate 
  • Know where your customers do business, search for funds transfers in and out of these jurisdictions 
  • Update your policy, procedures, and processes to reflect the changes in the FATF list 
  • Perform ongoing suspicious activity monitoring to include these higher-risk jurisdictions 
  • Ensure your manual or automated scanning processes include the newest FATF information in a timely manner 

FATF is the most important watchdog to deter jurisdictions that may allow money laundering, terrorist financing, and other illicit and corrupt activity to go on in their countriesIn fact, FATF and other global organizations let the charge for the United States to improve their beneficial ownership regulations. Regulators will expect that an institution's BSA program includes FATF recommendations and policies and procedures around jurisdictions of heightened risk. Following these will put your institution on the right track to a strong BSA program and a successful exam. 

About the Author

Terri Luttrell, CAMS-Audit

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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